Open the ISO in IsoBuster. Navigate to the BDMV folder then the STREAM folder.

In this folder you should find a the video called 00000.mts or 00001.mts or something similar.

Extract this to somewhere on your harddrive.

Once the file has finally finished extracting to the hard drive, open up tsMuxeR.

Add the file you just extracted, you should have a window like the following:

Press Start demuxing. This will take a few minutes depending on the size of the file and your computer.

The outcome of this is that we will have seperate audio and video files which we will now merge together using a great tool called mkvmerge.

In mkvmerge, we want to select the .ac3 file and the .264 file, so go to Add at the top right and select both these files.

mkvmerge will correctly detect what sort of file they are, but you will need to manually set the fps of the video as mkvmerge won't be able to detect it. The output from tsMuxeR will tell you the fps, then all you need to do now is select where you want to save the finished MKV and press Start Muxing.

Like the demux this will take a while depending on the files and the hardware in your PC, once complete you can play the MKV in your media player.